Debt Relief Basics

An old Arabic saying says that debts can weigh more than a mountain

, and anyone who has ever experienced mounting bills, credit card and mortgage payments can feel the weight of this truth. Unfortunately, not all of us get into trouble because we have been living beyond our means; there are those of us who have led a model life, saved for a rainy day yet the economic doldrums have pushed them into a tough spot. So are we doomed, or is there respite in sight? There is, you can make debt relief a reality with a little bit of careful planning, disciplined living and curtailed spending. Let's see how:

People who are neck deep in bills are looking for immediate relief, your debt may have piled on in the last few weeks or in the last few years either way, you can get quick debt relief. Initially, you need your credit report. If you haven't asked for one yet, you can get one free report each year. Not leaving out even the most minuscule amount, use the report to make a detailed list of all your debts.

The next step is to look at consumer counseling options; there are several non profit and for profit organizations that offer credit counseling services and they can help you to get immediate debt relief. You will have to meet a debt counselor with your debt list in hand, so that he can carefully evaluate your options.

With a credit counselor negotiating the lowest payments for you, you will end up paying substantially less than what you originally owed. Monthly payments will be manageable. Payments will be made to the counseling service on a monthly or weekly basis and they in turn will forward the money to your creditors.

If you compare the interest rate on your retirement account with the outgoing interest rate and notice that the latter is significantly more, then you are losing more than what you are making through the interest on your retirement account. In this case, you may want to consider cashing in a portion of your retirement funds; however, you need to understand, that any profit on these funds will be subject to capital gains tax.

Cheaper than a debt consolidation loan, would be taking a second mortgage on your house and it's also a good way to pay off your loans in full. However, making low monthly payments on your second mortgage is necessary, but the advantage with this option is that your debts will instantly be removed.

If your boss is approachable, try asking him for an advance that can be utilized to pay off smaller loans. But, you have to be willing to live with a slightly smaller salary.

As you can see, there are several options for debt relief; the most important aspect is to be prepared to do whatever it takes to be debt free.

by: Lori Richards

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